A crypto exchange that was accused of lying to hundreds of thousands of customers about the risks tied to a failed investment program agreed to return $50 million of digital assets to resolve a suit by New York Attorney General Letitia James.
Gemini Trust Co. struck the deal Friday with James, who sued in October over the company’s handling of the program, Gemini Earn. It’s the latest deal in a series of crypto investigations that included a probe into Barry Silbert’s Digital Currency Group.
Under the Gemini settlement, digital assets will be returned to investors who were locked out of their accounts when the program collapsed. Gemini will also be banned from operating a crypto lending program in New York, James said.
Victims “had their trust broken and their money swindled by Gemini through its bogus Earn program,” James said in a statement. “Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated.”
Friday’s settlement comes after James launched probes targeting the crypto industry. Silbert’s DCG is the parent company of bankrupt Genesis Global Holdco LLC, a crypto lender that operated the Earn program with Gemini. Genesis reached a $2 billion settlement with the Attorney General earlier this year.
In February, New York’s Department of Financial Services came to a separate agreement with Gemini to return at least $1.1 billion to customers through the Genesis bankruptcy case. In April, a Gemini-Genesis pact was approved in bankruptcy court, resolving litigation between the companies.
In a statement posted on social media, Gemini said that the remaining assets owed to customers following the Earn suspension in 2022 would be made available within 7 days.
“We are excited to deliver this full recovery to you and appreciate your ongoing patience and support,” Gemini said in the statement.
James had accused Genesis and DCG of attempting to hide more than $1 billion in losses following the collapse of crypto hedge fund Three Arrows Capital, allegations the companies have denied.
DCG, which was once valued at $10 billion, previously disclosed that it received about $575 million in loans from Genesis Global Capital. In a letter to shareholders in November 2022, Silbert referred to a $1.1 billion promissory note, which he said came about as the parent company stepped in to assume liabilities from Genesis related to the implosion of Three Arrows.
